Lanny’s August Dividend Stock Watch List

It’s that time of the month, where I have my calculator, the pen & pencil & I start analyzing what I love most, dividend stocks, and to see which companies have a chance to be on my watch list. I like to come out with the watch list towards the end of the month, as I line up my capital troops to see where they may be deployed. I did not make any investment stock purchases in July, yet, and the capital lineup is getting bigger.

The Dividend Stock Watch List

What’s the goal here? To Just Go For It – dividend investing style, of course. This month’s watch list shows quite a bit of promise and has changed slightly from last month, but also nice to have three different industries within here. All three companies are in my portfolio, which I am sure you can remember, I love adding to current positions if I can. Let’s take a look at the stocks (which are heavily vetted by our Dividend Diplomat Stock Screener) that are on my watch list!

AT&T (T): Can’t get enough of the big telecom here? I know T was both on my July AND June dividend stock watch list, but guess what – they were at $38.79 at the date I wrote that article in June, and were at $37.95 in July. Guess what? They are now trading at $36.51 as of July 21st or another 3.79% drop! Did anything really change? No, no. But – their yield has sweetened a little bit more to 5.37%, which is “lovely”. AT&T, as we know, is a massive telecom player here in the states, is a dividend aristocrat by increasing dividends over 25+ years strong and also has the ability to buy the latest technology to stay ahead. With the price to earnings (P/E) now at 12.55, they are in a very “sweet” spot. There has been a LOT of rumbling going on with the big merger/acquisition of Time Warner (TWC), with news articles talking about the bumps and bruises T has faced to close this deal and I believe President Trump had initially stated he wouldn’t let this go through, but now may have a few other thoughts. Time will tell. However, I’m more curious on what they’ll do about that dividend this winter : ) Further, as you’ll see in #3 below, the ex-dividend date was just a little bit ago, so there is quite a bit of time between now and the next dividend date.

Grainger (GWW): Now, I purchased Grainger, not once, but twice. They still have an under 16 price to earnings, based on earning analyst expectations of $10.38 for the year and their payout ratio is below 50%, a nice sweet spot for dividend investors. They’ve been shaken up lately, with transitioning to a more mobile/online friendly customer platform. However – I was JUST watching the news last night and there was a long discussion about hwo Amazon (AMZN) will find it difficult to compete with expertise on their platform, which is what Grainger (GWW) brings to the table for warehouse/operations, as well as higher quality products & smarter decisions for consumers (since consumers still like to “feel” the tools and supplies they are buying). Therefore, I believe if GWW makes a solid transition to mobile/online with their unique specialization and higher quality, they should still bode well into the future. Heck – revenues were even up in their latest quarterly earnings release. With a yield now over 3%, at 3.10%; keeping this one again on my radar.

Cisco (CSCO): I purchased Cisco back in mid-June at $31.525 per share and they’ve only gone up slightly to $31.84 since then. Their dividend yield is still at a ripe 3.64% and with an earnings expectation of $2.38, their P/E ratio is also favorable, at 13.38. Their payout ratio is less than 50%, and their latest dividend increase was over 11%. A great combination for success for a dividend investor. I only own $1,250 or so worth, and could see myself doubling this position, for sure. Are they at a solid price point? Yes. However, their ex-dividend date was only about 3 weeks ago, therefore, we have quite some time before they go ex-again. Not saying that’s a reason to hold off, by any means, but something to consider, now that there is more time in between now and capturing the next dividend.

The watch list summary & Conclusion

Why am I watching these powerful dividend beasts above? Well, I recently wrote about the power of $50,000 in dividend income and this is definitely a stream, with today’s tax situation, that I would love to have more of, obviously. Further, as I described in my earlier post, I need to close that gap on my dividend income goal this year and these stocks on the watch list could help me get there. On a different note, the three stocks on the watch list I’ve listed out above, all have yields that are at or above my overall portfolio yield, something I’ve been lacking in my recent purchases of Kroger (KR) and CVS Pharmacy (CVS), whom had yields below my average.

Are any of these names on your watch list? Are you nervous about what AT&T (T) is doing with their merger/acquisition move of Time Warner? Do you think this deal will go through and/or do you think this will impact their ability to pay their current dividend going forward? Think Grainger (GWW) is a sinking ship at all with Amazon’s (AMZN) space online? Would love to hear your thoughts on these stocks above and also, what YOU are looking at! Thanks everyone for checking out my watch list for the month, check back soon, good luck and happy investing!

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42 thoughts on “Lanny’s August Dividend Stock Watch List”

Nice list. Previously i didnt hear of grainger until some bloggers startes talking about it. Now they have some ads on the radio and created a massive warehouse just down the road from 2 massive amazon warehouses…. =) i dunno much about a t and t but seems like a solid telecom and great dividend. Cisco still seeems like a great deal.

Lanny, I recommended all 3 of those stocks (T, GWW, and CSCO) to a friend recently along with ADM, GPC, SON, and some others – naturally he bought XOM, which is not the worst move. Still those are some quality stocks there, most of which I am keeping a keen eye on as well. – Gremlin

Strong recommendations overall there. What’s wild is the burst AT&T(T) went on, aka holy crap. Honestly, I was going to purchase them next week, now, I will not haha. However, CISCO is still up for debate for me, may be buying more shares here shortly. Keeping an eye on ADM/GPC as well!

Always a fan of T and CSCO. Was looking at starting a position with KR after the last dip but think there is still better value out there. GIS has been thrown out a lot lately trading at its 52 week low. With an over 3% yield, it looks to be a good buy for the long term. Seems like a lot of value in the market right now. Would love to buy more but free capital is limited right now so kind of sitting on a buying freeze temporarily.

Wish KR would have stayed low after the AMZN announcement, somehow I’m up double digit percentage on them, it’s insane. GIS has been wild. I do like CSCO – price unchanged for QUITE some time… curious what that price does tomorrow.

Well, T is already in my portfolio and I add to that position every month. CSCO is currently on my short list of stocks to add to my portfolio. I needed to find a 5th stock, and, even before I read your post, was contemplating adding GWW to the mix. I am somewhat concerned about the Amazon threat so to speak on GWW, but I do feel that the company has strong fundamentals and is currently undervalued. I’m still deciding, but clearly, I think these three stocks are worth their place on your watch list.

CSCO would be my choice out of those three. Very healthy balance sheet and cash flow generation. The yield is elevated compared to historical levels to reflect some reasonable uncertainty, but the company has the war chest ($36B NET cash position) to comfortably weather almost any storm that may lie ahead, and still raise its dividend at double digit rates.

I know I am in the minority in the DGI blogosphere, but I really dislike T. It has the balance sheet of a utility, it’s priced like a utility, but it doesn’t enjoy the regulatory blessed monopoly of a utility…it faces a lot of competition in all of its business lines.

I realize it yields 5%+ which in this environment is guaranteed to get a lot of attention. But investors will be lucky if that distribution keeps up with much less outpaces inflation. The 1yr, 3yr and 5yr DGRs are 2.10%, 2.20% and 2.20% respectively, and there’s not much reason to expect that to improve.

But considering the bloated balance sheet and market competition, there is a reasonable chance it gets worse. That is an asymmetric risk that’s very unappealing to me.

If they can get the Time Warner deal to go through, that will get them closer to the kind of vertically integrated monopoly you’d be looking for (distribution AND content). The deal is going to be costly though. It’s going to take a lot of cash they don’t have (so more debt) and it will be dilutive to current shareholders. Hope it’s worth it!

Just my two cents. Like I said, I know I’m in the minority on this one.

At the end of the day you’d probably do pretty well to invest in any or all of these.

I suppose many investors just want to be seated on the right table. No doubt people use way more data before, and telecom companies aswell as digital REITs will benefit, but man, the competision is hard. Playing one card here is dangerous!

On the AT&T front – the combo, at the time of the price when the article was written, would have had a 5.40% yield + 2.00 %growth or a 7.40% dividend power rating, not the worst, not the best, but solid enough. Agree, though, on the fierce competition out there, but AT&T is the big giant out there.

I think CISCO has more value here, at the moment, and have the resources to scale operations in the ever changing technology environment. Let’s just say I’m looking forward to owning more shares.

Always nice to see what you are considering going forward. GWW had a nice dip a few days ago. Seems like with any earnings miss or weak guidance daily deals can be found. From the names you mentioned it’s GWW for me. I still have limited interest in tech though I like QCOM potentially. Thanks for sharing.

Good list. I am watching T very closely and am considering adding to my position. GWW and CSCO are on my stock radar. I am still in “reload” mode after a pulled the trigger on GIS earlier this month. Looking forward to adding more great companies to my portfolio.

Digging the name. How big is your position? Love the yield, but we just missed out on an almost $4 lower price. Given today’s close price – CSCO is big on my list. Pumped! Let’s stay consistent, hungry and keep going hard at this. The only way.

Nice list, Lanny. Of the 3 you mentioned I like CSCO and GWW the most (I own some GWW). CSCO might be a steadier play at this point considering the uncertainty surrounding GWW these days… however, that uncertainly could mean more upside potential should things stabilize.

Other Duke here. GE was the first stock I ever bought, and I finally added another chunk last week, bringing the name into my top 10 holdings. I look at GE as a battleship, takes a loooong time to turn around. I think the 5-10 year timeframe looks good for the industrial giant, especially when oil eventually rebounds. Healthcare will continue to be a stalwart as the baby boomers age in the meantime, and an increasingly global world underpins the aviation bull case. According to my FCF analysis, the dividend is very safe. There’s no longer risk of a 2008 financial crisis slashing the divvy post-Synchrony, and new management has doubled down its commitment to growing and maintaining shareholder distributions. I see this one as requiring a lot of patience in the short and intermediate terms, but long term the current price points are attractive.

Totally agree with Jack – and just wanted to add that one huge task they are investing in for the long term is the new IoT market. If it really becomes a billionaire market, and they take charge of it – we can all enjoy the fruits of that labor :D.

Thanks for the post – GD, Starbucks, McCormick have had some great pullbacks, especially SBUX as of late. Their growth rates are phenomenal and something for sure to consider. If you have low yield – needs to be paired with high div growth, so you are spot on and I dig it!

Finally picked up MKC last week myself, after coveting the name for years of patience. I’m in the minority that likes the recent deal, with French’s and Frank’s adding two #1 brands in their segments to an already legendarily strong business.

I just bought 3M, Unilever, and Home Depot this week, which were all new positions and used up all my cash. That turned out to be a bit of bad timing as Altria is now looking like a great buy after Friday’s pullback, but I don’t have any cash.

T is my second largest position in my div portfolio and by following my own overweight rules, I can’t really add any more to it at this time. Also, not worried about the merger, it will go through and T would come out as a media giant. Also own CSCO and love the dividend increase, though the stock price has been stuck in low 30s for sometime.

I have several stocks on my watch list, however I’m not buying anything at the moment and instead patiently waiting for a correction while raising more cash. I think, conditions for a perfect storm is brewing and it will come sooner than later.

Big believer in $T and $CSCO. Both control a lot of parts of things that we use every day and will continue to use. $GWW, I’m not as confident, they are very late to the game of online transition and might be a little too late.

Thanks for the post and definitely have decent positions in T and may have just purchased more of CSCO today!!! I did lay off on GWW, to see if their revenue continues to expand, but to see what they do on the margin side of things. Appreciate the input over there!

I’m not really interested in utilities, tobacco, insurance or retail at the moment, so that leaves IBM and UNP. I already own some IBM and am not sure if I want to add more to it, so that makes UNP the sole survivor of my filter. And I really like trains :).